Zero hours contract and contracting for the same company

Dimitar Georgiev

Free Member
Sep 15, 2021
2
0
Hello to everyone. I am contracting for one company let's say named X, the company is small and my contracts are outside IR35. Some of the end clients don't want the companies to use contractors. For one of them, my company X offered me to work for them on a zero-hours contract for this client and to continue with contracts for the other clients. I am not sure that I can work on zero hours and later to continue contracting for the same company without being hit from the IR35 rules and the new contract to be put inside IR35
 

Newchodge

Business Member
Nov 8, 2012
16,233
4,585
Newcastle
Hello to everyone. I am contracting for one company let's say named X, the company is small and my contracts are outside IR35. Some of the end clients don't want the companies to use contractors. For one of them, my company X offered me to work for them on a zero-hours contract for this client and to continue with contracts for the other clients. I am not sure that I can work on zero hours and later to continue contracting for the same company without being hit from the IR35 rules and the new contract to be put inside IR35
You cannot be inside IR35 if the company you are contracted to is too small. That is not the issue.

Either you are an employee or you are a contractor. This status is a legal one and is decided by a number of questions in relation to control, substitution, risk and so on for each contract. The fact that you are an employee when working for one client and not an employee when working for other clients may make you an employee throughout or it may not. It would depend on how similar the different contracts are.
 
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NicoJ

Free Member
Mar 27, 2017
404
76
Sorry to disagree with Cyndy - the contracts can be within IR35 but as Company X is small they are not the ones who will administer the deductions, the subcontractor does.

I'm guessing that X is an agency? In which case each contract will be assessed on its own individual merits. In reality if you are doing the same type of work then in theory the assessment should be similar.

The reason that the end client wants you on PAYE is to minimise their own exposure to the risk of IR35. There is no reason why this should impact you in future contracts. It also does not mean that the contract is within IR35.
 
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Newchodge

Business Member
Nov 8, 2012
16,233
4,585
Newcastle
Sorry to disagree with Cyndy - the contracts can be within IR35 but as Company X is small they are not the ones who will administer the deductions, the subcontractor does.

I'm guessing that X is an agency? In which case each contract will be assessed on its own individual merits. In reality if you are doing the same type of work then in theory the assessment should be similar.

The reason that the end client wants you on PAYE is to minimise their own exposure to the risk of IR35. There is no reason why this should impact you in future contracts. It also does not mean that the contract is within IR35.
You are wrong. IR35 puts the onus on the large client company to assess employee status. That does not apply to small companies. It has always been the case that the subcontractor has to make the appropriare deductions. That has nothing to do with IR35.

If the OP is actually an employee the employer has a liability to pay tax and Ni based on the employee's pay being nett pay after tax and NI have been deducted.
 
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NicoJ

Free Member
Mar 27, 2017
404
76
You are wrong. IR35 puts the onus on the large client company to assess employee status. That does not apply to small companies. It has always been the case that the subcontractor has to make the appropriare deductions. That has nothing to do with IR35.

If the OP is actually an employee the employer has a liability to pay tax and Ni based on the employee's pay being nett pay after tax and NI have been deducted.

Actually, I'm not wrong here Cyndy. IR35 has been around for a long time and applies to every contract that is entered into where an intermediary is present. The recent legislation just transfers responsibility for the administration of the taxes. Small companies are exempt from this responsibility but that does not mean that IR35 does not apply.

IR35 dictates that the income is treated differently (to try and bring it into line with the amount that would have been charged had the worker been employed).

EDIT - just confirmed the date that IR35 came into legislation. It was 2000.
 
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NicoJ

Free Member
Mar 27, 2017
404
76
Thank you all. The company which I am contracting is just a small company, not an agency. Definitely is classified as a small company.

As I said above each contract needs to be assessed on a separate basis to ascertain whether it is inside or outside of IR35.

The fact that the contractor is small means that you are responsible for the determination and application of the IR35 rules.

I would advise you to take further advice if you are not confident in the assessment process.

Having one contract on PAYE doesn't necessarily prevent you from contracting through your ltd company on future contracts with the same company.
 
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